. Peculiarities in the investment analysis of wind energy projects
1 year ago
Peculiarities in the investment analysis of wind energy projects The investment analysis can be considered as a set of techniques that allow the comparison between the results of making decisions regarding the different alternatives in a scientific manner. In these comparisons, the differences that mark the alternatives should be expressed in quantitative terms. To express in quantitative terms the differences between the alternatives for decision-making uses economic engineering principles. The IRR and NPV based on the same principles of equity capital10 and lead to the same decision. The key difference among the two techniques is that the NPV assumes reinvestment at the same cost of capital (discount rate), while the IRR assumes reinvestment will be the actual internal rate of return of the project.
Because of this, the NPV is biased toward larger investments. While on return is greater than the discount rate. The analysis of the NPV will push the decision to bigger projects, even if the relative profitability is smaller. The SPB, DPB and IRR are functions of ICC/AAR. Minimizing ICC/AAR will maximize the wealth of the equity invested. For the optimization of wind farm, should be determined to maximize the wealth obtained from the absolute wind farm or to maximize the relative wealth generated by the project. As the wind turbine is modular, it is more convenient to choose the size of the rotor, which maximizes the relative ability of the wind turbine to generate wealth. In case you decide to minimize the SPB because of the method is simpler as shown before, to minimize SPB will result in the same optimal design to maximize the IRR. An example is when you want to maximize absolute wealth would be if the land available for development of wind farms were limited. In this case, the absolute wealth generated by the wind farm can be maximized by selecting a turbine capable of producing greater.
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